TaxTMI 
TaxTMI 
2015 (10) TMI 1278
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....eged perquisite 1.1 The learned CIT (A) erred in confirming the addition of Rs. 10,000 on account of alleged perquisite on account of services rendered by CA Shri. Whora B.A. On the facts and in the circumstances of the case the said addition be cancelled. 1.2 The learned CIT (A) failed to appreciate that Jain Irrigation Systems Ltd., (JISL) had paid professional charges of Rs. 2,79,000 to said Mr. B. A. Whora only for rendering services to the said company and no part of such payment could be treated as perquisite in the hands of the appellant on account of honorary services rendered by Mr. Wohra to the appellant. 1.3 Alternatively, the value of alleged perquisite be restricted to a nominal amount as against the addition of Rs. 10,000 which is excessive." 2.1 Facts of the case, in brief, are that the assessee is an individual and derives income from rent and other sources. During the course of assessment proceedings the Assessing Officer noted that one Shri B.A. Wohra, Chartered Accountant filed the returns of group cases of 5 Gents and 4 Ladies of the family as well as Jain Irrigation System Ltd. The services of two employees of the company are also utilised for th....
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....e sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. There is no dispute to the fact that Shri B.A. Wohra is getting huge professional fess of Rs. 2,79,000/- from Jain Irrigation System Ltd., (JISL). At the same time, there is also no dispute to the fact that Shri B.A. Wohra is attending to the individual tax matters of the assessee and various family members and have not charged anything separately from them. It is the case of the Revenue that a part of the remuneration paid by JISL should be attributable in the hands of the assessee as perquisite for which the AO made addition of Rs. 10,000/- in the hands of the assessee and the same has been upheld by the CIT(A). It is the case of the Ld. Counsel for the assessee that there is no bar for anybody rendering voluntary services. Further, there is also no material on record to suggest that the company has paid any sum to the consultant on behalf of the assessee for rendering professional services. We find merit in the above submission of the Ld. Counsel for the assessee. It is not mandatory or compulsory for any professional to charge for the professional services rendered to any....
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....31-03-2009 and added towards the income of the assessee u/s.2(24)(iv) of the I.T. Act. 7.2 It was submitted by the assessee that there is no justification for making the addition on this account. It was submitted that it is not unusual for property owners to collect interest free deposits. Relying on various decisions it was submitted that under the I.T. Act, only the real income could be brought to tax unless there is a specific provision to the contrary. The assessee further submitted that provisions of section 28 deals with income from business or profession and the rent from letting out is taxable. It was further submitted that no such addition has been made in the preceding assessment years on this account. 7.3 However, the AO was not satisfied with the explanation given by the assessee. So far as the argument of the assessee that no addition has been made in the preceding assessment years he held that each assessment year is a separate and independent assessment year. Distinguishing the various decisions cited by the assessee before him he made addition of Rs. 16,48,208/- to the total income of the assessee u/s.2(24)(iv) of the I.T. Act. While doing so, he observed that....
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.... Gopikrishna Murlidhar 47 ITR 469, the decision of Hon'ble Gujarat High Court in the case of Shree Digvijay Cement Vs. CIT 138 ITR 45 (Gujarat) and the decision of Hon'ble Madhya Pradesh High Court in the case of Birla Gwalior Pvt. Ltd., Vs. CIT 44 ITR 847 (MP). 9. However, the Ld.CIT(A) was also not satisfied with the explanation given by the assessee. Instead of giving any relief the Ld.CIT(A) enhanced the addition to Rs. 19,54,208/- by observing as under : "10. I have gone through the details filed and submissions made, besides the reasons for addition as stated by the AO in his order. I find that the interest free deposit of Rs. 3.06 crore to the appellant for hiring the land was totally disproportionate to the market practice and the value of the property. Besides, the company was paying a hefty yearly rent of Rs. 25,50,000/- (net of TDS) to the appellant which also seems to be disproportionate to the market rent. As mentioned earlier, I find that the interest free deposit received is highly excessive and disproportionate to the value of the property and the amount of rent charged. I am therefore, of the considered view that AO was justified in treating the notional inte....
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....ccount of the directors would not constitute perquisite for the purpose of section 40A(5). Similarly, referring to the said decision he submitted that it has further been held that non-charging of interest on advances to directors would not constitute perquisite u/s.17(2) of the I.T. Act. Referring to the decision of the Hon'ble Calcutta High Court in the case of CIT Vs. P.R.S. Oberoi reported in 183 ITR 103 he submitted that the Hon'ble High Court in the said decision has held that interest free loan obtained by a director of a company is not to be regarded as benefit provided by the company within the meaning of section 2(24)(iv) of the I.T. Act. He accordingly submitted that the order of the CIT(A) be set-aside and the addition be deleted. 11. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). He drew the attention of the Bench to page 8 of the assessment order and submitted that the AO has categorically given a finding that this is only a paper transaction and the directors have availed undue advantage from the company who has borrowed money by paying huge interest and diverted the same to the directors free of interest. He accor....
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.... AO. However, the Tribunal following the decision of Hon'ble Calcutta High Court in the case of CIT Vs. P.R.S. Oberoi reported in 183 ITR 103 deleted the addition. When the matter travelled to the High Court, the Hon'ble High Court decided the issue in favour of the assessee and against the Revenue by observing as under : "5. Before considering the arguments raised by the learned counsel for the parties, the provisions of law as it existed, relevant for the Assessment Years in question reads as under: "2. In this Act, unless the context otherwise requires - xxx xxx xxx 24. "income" includes - xxx xxx xxx (iv) the value of any benefit or perquisite, whether convertible into money or not, obtained from a company either by a director or by a person who has a substantial interest in the company, or by a relative of the director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by the director or other person aforesaid; 6. Learned counsel for the appellant has relied upon two judgments of Madras High Court reported as Additional Commissioner of Income Tax Vs. Late A.K.Lakshmi & others ....
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....g a site or a house and a site or for purchasing a motor car and either no interest is charged by the employer on the amount of such loan or interest is charged at a rate lower than the rate of interest, which the Central Government may, having regard to the rate of interest charged by it from its employees on loans for such purpose granted to them, such benefit will be regarded as "perquisite". But such amendment was repealed in the very next year. In view of the said amendment, the Court held to the following effect: ".......The question therefore arises whether the enjoyment by the assessee of interest-free credit an be treated as a "benefit or perquisite" within the meaning of section 2(24) (iv) of the Income- tax Act, 1961. The intention of the Legislature seems to be very clear that the expressions 'benefit" and/or "perquisite" did not include the enjoyment of loan or credit, free of interest or at a concessional rate. This aspect has been recognized by the statute itself and to bring such items in /the net of taxation, the law was amended by the Taxation Laws (Amendment) Act, 1984. By this amendment, as already indicated, a new sub-clause (vi) was inserted in Section ....
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....has approved the view of Calcutta High Court and also noticed that the judgments of Madras High Court are prior to amendment carried out by the Taxation Laws (Amendment) Act, 1984 and consequent repeal by the Financial Act, 1985. Such intervention makes the intention of the Legislature clear that had the existing provisions been sufficient to treat the benefit of interest free loan, as deemed income, the same would not have been incorporated by way of amendment and subsequent repealed. In the aforesaid case, the assessee was in appeal aggrieved against the judgment of Karnataka High Court, wherein reliance was placed upon judgments of Madras High Court, as mentioned above. The Hon'ble Supreme Court has also quoted with approval, the passage from the judgment of P.R.S. Oberoi's case (supra). It observed: "......The amendment made by the 1984 Amending Act was both to Section 17(2) and Section 40A (5). In the impugned judgment reference in fact had been made to inclusion of Sub Clause (vi) in Clause (2) of Section 17. Moreover, the High Court in the impugned judgment did not consider the amendments made by the Amending Act, 1984 on the ground " it is difficult to see how th....
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....nd Bros. Pvt. Ltd. vs. CIT(Supra) has held that insertion of clause (vi) in sections 17(2) and 40A(5) by Taxation Laws (Amendment) Act, 1984 and its subsequent repeal by Finance Act, 1985 provide a clear direction to interpret the provisions of section 17(2) and 40A(5) before insertion of clause (vi). Therefore, when a company obtains loan by paying interest and advances the same to directors without charging any interest, the interest attributable to the amounts advanced to directors could not be treated as perquisite. 12.2 We further find that the Ld. Departmental Representative could not controvert the submission of the Ld. Counsel for the assessee that no such disallowance was made in scrutiny assessments in the past and no 263 proceedings or 148 proceedings were initiated after completion of the assessment. In view of the above discussion, we are of the considered opinion that no addition on account of interest u/s.2(24)(iv) is required on interest free deposit advanced to the assessee. Ground raised by the assessee is accordingly allowed. 13. Ground of appeal No.3 by the assessee reads as under : "3. Addition/enhancement u/s.14A of the Act. 3.1 The Ld.CIT(A) erred....
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....dend and the assessee has made investment in instruments which are exempt income. The Ld.CIT(A) enhanced the income of the assessee by Rs. 88,921/- being disallowance u/s.14A r.w. Rule 8D. 13.3 Aggrieved with such order of the Ld.CIT(A) the assessee is in appeal before us. 14. The Ld. Counsel for the assessee referring to pages 10 to 14 of the paper book drew the attention of the Bench to the computation of income and submitted that the assessee has not claimed any expenditure from the dividend income. Referring to the decision of the Pune Bench of the Tribunal in the case of ACIT Vs. M/s. Magarpatta Township Development and Construction Company Pvt. Ltd., vide ITA No.2114/PN/2012 order dated 27-05-2014 for A.Y. 2009-10 he submitted that the Tribunal in the said decision has held that no disallowance u/s.14A r.w. Rule 8D is required when there is no direct or indirect expenditure incurred by the assessee in relation to earning exempt income. He also relied on the decision of Hon'ble Bombay High Court in the case of CIT Vs. Reliance Utilities and Power Ltd., reported in 313 ITR 340 and the decision of the Pune Bench of the Tribunal in the case of Dharmveer Sambhaji Urban Coop.....
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....assessee, is not satisfied with the correctness of the claim of the assessee in respect of expenditure incurred in relation to the income which does not form part of the total income i.e. exempt income. It is no longer res integra that invoking of rule 8D of the Rules in order to compute the disallowance u/s 14A of the Act is neither automatic and nor is dependent merely on the existence of an exempt income in the hands of the assessee. In support of the aforesaid proposition, A.Y. 2009-10 a gainful reference can be made to the judgement of the Hon'ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. (supra) as well as the judgement of the Hon'ble Delhi High Court in the case of Maxopp Investment Ltd. & Ors. vs. CIT (2012) 247 CTR 162 (Del). The Pune Bench of the Tribunal in the case of Kalyani Steels Ltd. (supra) has also considered the aforesaid judgements and concluded that section 14A(2) of the Act envisages a condition precedent for invoking rule 8D of the Rules and computing disallowance; and, such condition being that the Assessing Officer records that he is not satisfied with the correctness of the claim of the assessee in respect of expenditure incurred ....
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.... of interest-free funds and the investments made by the assessee in the mutual funds during the year. The CIT(A) further notes that the Assessing Officer considered interest expenditure of Rs. 3,00,19,761/- as expenditure not directly attributable to any particular income or receipt and subjected the same to disallowance as per clause (ii) of sub-rule (2) of rule 8D of the Rules. As per the CIT(A), the manner and the working for considering Rs. 3,00,19,761/- for the purposes of clause (ii) of subrule (2) of rule 8D of the Rules has not been recorded by the Assessing Officer in his order. The CIT(A) further records that the Assessing Officer has not examined the accounts of the assessee so as to arrive at a satisfaction and finding regarding incurrence of direct or indirect expenses in connection with earning of the exempt income, as required by sub-section (2) of section 14A of the Act. The CIT(A) also observed that assessee has made the investment from own funds and therefore question of any expense on account of interest for earning of impugned exempt income, "in the given set of facts and circumstances of the case, does not arise". 10. Pertinently, we find no such reasons to ....
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....d of appeal No.1 by the assessee reads as under : "1. Addition of Rs. 62,406/- - alleged perquisite 1.1 The learned CIT (A) erred in confirming the addition of Rs. 62,406 on account of alleged perquisite on account of services rendered by CA Shri. Whora B.A. On the facts and in the circumstances of the case the said addition be cancelled. 1.2 The learned CIT (A) failed to appreciate that Jain Irrigation Systems Ltd., (JISL) had paid professional charges of Rs. 2,79,000 to said Mr. B. A. Whora only for rendering services to the said company and no part of such payment could be treated as perquisite in the hands of the appellant on account of honorary services rendered by Mr. Wohra to the appellant. 1.3 Alternatively, the value of alleged perquisite be restricted to a nominal amount as against the addition of Rs. 62,406 which is excessive." 18.1 After hearing both the sides, we find the above ground is identical to ground of appeal No.1 in ITA No.735/PN/2013. We have already decided the issue and the ground raised by the assessee has been allowed. Following the ratio, this ground by the assessee is allowed. 19. Ground of appeal No.2 by the assessee reads as under....
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.... 2 Computation of disallowance A) Interest amount paid 68,96,925 B) Average value of investment from which income is exempt 6,96,05,606 C) Average value of Total Assets 21,98,43,410 3 Disallowance = A*B C 68.96.925*69605606 21,83,666 21,98,43,410 4 0.5 % of the Average value of investment, income from which is exempt As on 31.03.2008 13,39,25,086 As on 3 1.03.2009 52,86,127 Total 13,92,11,213 Average 6,96,05,606 0.5 % of the Average 3,48,028 Total 25,31,694 20. The Ld. Counsel for the assessee submitted that the assessee has not claimed any administrative expenses. He submitted that as against interest expenditure of Rs. 68,96,925/- incurred by the assessee he has claimed deduction of only Rs. 56,16,040/-, i.e. to the extent of int....
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.... the disallowance u/s.14A r.w. Rule 8D should be recomputed by taking the interest expenditure at Rs. 56,16,040/- and not Rs. 68,96,925/- for working out the disallowance u/s.14A r.w. Rule 8D(1)(ii) since the assessee is not in appeal against the disallowance of the administrative expenses under rule 8D(1)(iii). We therefore restore this issue to the file of the Assessing Officer for recomputing the disallowance u/s.14A r.w. Rule8D after giving due opportunity of hearing to the assessee as per law. This ground by the assessee is accordingly partly allowed for statistical purposes. 24. Ground of appeal No.3 being general in nature is dismissed. ITA No.780/PN/2013 (By Revenue) (Shri Atul B. Jain) : 25. Ground of appeal No.1 by the Revenue reads as under : "(1) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 4,80,09,600/-, while in para-8 of his order, he himself held that the transaction of gift of shares to a private limited company as a debatable issue. Thus, the Ld.CIT(A) has erred in not considering the provisions of section 28(iv) which does not speak that there should be two persons and it speaks only '....
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....enefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession". The section does not speak that there should be two persons. The section speaks only 'FROM BUSINESS OR PROFESSION" as mentioned above. This clearly attracts the provisions of Section 28 (iv) of the Income Tax Act, 1961 and I hereby hold the difference of amount of shares transferred at the market rate and cost price as the assessee's income. This works out to Rs. 1,80,000 x 266.72 = Rs. 4,80,09,600/-". 25.3 Before the CIT(A) it was submitted that the shares in question were not sold during the year. The assessee had only passed an accounting entry by transferring shares account in his own capital account in his books of account without involving any other person. It was submitted that the assessee has not received any benefit in kind or otherwise which could be brought to tax u/s.28(iv) of the I.T. Act. Various decisions were cited before the Ld.CIT(A) and it was submitted that only the real income can be brought to tax under the I.T. Act. Therefore, the transaction which really involves transfer of funds or assets from one pocket to a different pocket of ....
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....ver, the AO has brought to tax the so called value of 1,80,000 shares only, the cost of which was transferred to Capital Account. Further, the appellant has made a gift of shares to a private limited company which is a legal entity. Even if the gift of shares to a private limited company is a debatable issue, under the facts and circumstances of the present case, sec. 28 (iv) of the Act per se has no application as there being no evidence of appellant deriving any benefit or perquisite. The appellant vide letters dt. 7/12/2011 has replied that the gift of shares to Jalgaon Investment (P) Ltd was unconditional and irrevocable. The donee company was authorized to accept the gift as per its Memorandum of Association and Article of Association. Further, the appellant has stated that sec.25 of Indian Contract Act does not invalidate the gift of shares made to the above company. The appellant vide letter dt.3/12/2012 has stated that the provisions of sec. 47(iii) of the Act also do not apply in his case. There is nothing on record to prove that any consideration or benefit has been passed on to the appellant. In short, the addition of Rs. 4,80,09,600/- cannot be justified either on facts....
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....nd it can be valued on cost price where assessee normally valued its stock at cost price. Referring to the decision of Hon'ble Calcutta High Court in the case of CIT Vs. Dhanuka & Sons reported in 124 ITR 24 he submitted that the Hon'ble High Court in the said decision has held that loss claimed on mere transfer of shares from the assessee share account to its investment account is not allowable. He submitted that going on by the reverse way no profit also should be taxed. He accordingly submitted that the order of the CIT(A) being in consonance with law should be upheld and the ground raised by the Revenue should be dismissed. 29. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. In the instant case, we find the assessee is the proprietor of M/s. Jain and Sons Investments Corporation, Jalgaon. It was holding 181208 shares of JISL. Cost of acquisition of such shares was Rs. 46,98,998/-. The assessee gifted 180000 shares valued at Rs. 46,66,675/- to JISL by passing an accounting entry in the book....
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....and Sons Investment Corporation has not been claimed. From the various details furnished by the assessee he observed that the assessee has shown investment in immovable property at Rs. 1,53,05,394/- and investment in shares at Rs. 95,20,941/-. The assessee had not given the details of utilisation of borrowed funds. He, therefore, was of the opinion that borrowed funds must have been utilized for purchase of shares as well as purchase of immovable properties. He observed that the assessee paid interest of Rs. 68,96,925/- on borrowed funds in the past. Similarly, the assessee has earned interest of Rs. 56,16,040/- for investment made in FDs with bank/companies and shares of Cooperative Bank. Since the interest paid on borrowed funds was higher than the interest earned the assessee restricted the deduction to the interest paid to Rs. 56,16,040/- excluding the excess interest paid on Rs. 12,80,885/-. Since there was no business activity during the year the AO was of the opinion that allowing interest paid on borrowings does not arise. The income from interest on FDs/Dividend and other income has to be taxed under the head "income from other sources". Since the assessee did not furnish ....
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....he extent of interest income. The assessee in the impugned assessment year has also restricted the claim of such interest payment to the extent of interest received. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) deleting the disallowance of interest to the extent of Rs. 56,16,040/- from the interest expenditure. Ground raised by the Revenue is accordingly dismissed. ITA No.737/PN/2013 (Shri Ashok Bhavarlal Jain) : 35. Ground of appeal No.1 by the assessee reads as under : "1. Addition of Rs. 62,406/- - alleged perquisite 1.1 The learned CIT (A) erred in confirming the addition of Rs. 62,406 on account of alleged perquisite on account of services rendered by CA Shri. Whora B.A. On the facts and in the circumstances of the case the said addition be cancelled. 1.2 The learned CIT (A) failed to appreciate that Jain Irrigation Systems Ltd., (JISL) had paid professional charges of Rs. 2,79,000 to said Mr. B. A. Whora only for rendering services to the said company and no part of such payment could be treated as perquisite in the hands of the appellant on account of honorary services rendered by Mr. Wohra to the appellant. 1.3 Alternatively, the v....
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....est on interest free advance given to the director on account of letting out of his bungalow. This ground by the assessee is accordingly allowed. 39. Ground of appeal No.3 by the assessee reads as under : "3. Addition of Rs. 48,38,931/- u/s.14A of the Act. 3.1 The learned CIT (A) erred in enhancing the assessment by way of disallowance u/s. 14A of Rs. 48,38,931. On the facts and in the circumstances of the case, the disallowance u/s. 14A be cancelled. 3.2 The learned CIT (A) erred in making enhancement on the ground not mentioned in the assessment order and consequently the addition of Rs. 48,38,931 could not be sustained. 3.3 The learned CIT (A) ought to have appreciated that deduction in respect of interest paid is claimed only to the extent of interest received, which is offered to tax and ignoring the claim for excess payment. 3.4 The learned CIT (A) erred in ignoring the fact that the investment in shares of the company (dividend from which being exempt) was made long ago and that too out of owned/non interest bearing funds. 3.5 The learned CIT (A) failed to appreciate that in the absence of any nexus between the borrowed funds and investment in shares ....
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....companies and shares of a Cooperative Bank and the assessee has earned interest income of Rs. 60,17,336/-. Since the interest paid was higher than the corresponding income, the assessee restricted the deduction to Rs. 60,17,336/- ignoring the excess interest paid at Rs. 50,00,664/-. He submitted that the facts of the present case are identical to the facts in the case of Shri Atul Bhavarlal Jain. Since the total disallowance of Rs. 48,38,931/- as per section 14A r.w. Rule 8D is less than the interest foregone by the assessee by not claiming the excess interest paid, therefore, no addition is called for. 41. The Ld. Departmental Representative on the other hand supported the order of the CIT(A). He submitted that as per the own calculation of the assessee the disallowance u/s.14A r.w. Rule 8D is Rs. 48,38,931/-, therefore, no relief should be granted to the assessee and the order of the CIT(A) be upheld. 42. We have heard the rival arguments made by both the sides. Admittedly, the assessee had earned interest income of Rs. 60,17,336/- and paid interest of Rs. 1,10,18,000/- and has not claimed the excess interest paid to the extent of Rs. 50,00,664/-. We have decided an identic....
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....has taken the said property on exorbitant rent and deposit and give benefit to the assessee." 46.1 Facts of the case, in brief, are that the assessee has let out his premises to Jain Irrigation System Ltd., Jalgaon for an annual rent of Rs. 11,50,536/- (net of TDS). The assessee has also obtained the interest free deposit of Rs. 1,14,60,000/- from the tenant. During the assessment proceedings, the AO noted that the assessee is holding key position in the company JISL. He has given his property including furniture, fixtures and surrounding land on rent to the company at exorbitant rent of Rs. 11,50,536/- and obtained interest free deposit of Rs. 1,14,60,000/- to be adjusted towards rent in 12 years. The cost price of the property is only Rs. 14,95,470/- which was the property of the company and sold to Jain Enterprises, a firm where the assessee was partner and later on assessee's name was made on 26-07-1999. According to the AO, the assessee was not owner of the property on the date of execution of rent deed. He further observed that when the company was the owner of the property then why it sold its property to the firm and later on taken out the property on exorbitant rent plu....
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....,406 Less : deduction of 30% 5,64,721 13,17,685 Consequently, the income of the appellant under the head income from house property is enhanced by Rs. 5,12,310/- (i.e. Rs. 13,17,685 - Rs. 8,05,375). The appellant was given an enhancement notice in this regard on 23/10/2012. Appellant's contention in response to the said enhancement notice is not found to be tenable and hence rejected. AO is directed accordingly. However, AO's action in treating notional interest (Rs. 6,17,270) on security deposit as perquisite u/s 2(24)(iv) of the Act is not found to be in order. The notional interest has been enhanced to Rs. 7,31,870/- but included in the Annual Value of the property for the purpose of determining income from house property. In view of the above, income from house property stands enhanced by Rs. 5,12,310/- i.e. from Rs. 8,05,375/- to Rs. 13,17,685/-. AO's action in treating the income from house property as income from other sources is also not found to be justified. This issue has been discussed in detail in paras 13 and 14 below." 46.2 Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. ....
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.... the side, we find the above ground is identical to ground of appeal No.2 vide ITA No.737/PN/2013. We have already decided the issue and the ground raised by the assessee has been allowed. Following the same ratio, this ground by the assessee is allowed. 51. Ground of appeal No.3 by the assessee reads as under : 3. Addition of Rs. 43,72,666 - u/s. 14A of the Act. 3.1 The learned CIT (A) erred in enhancing the assessment by way of disallowance u/s. 14A of Rs. 43,72,666. On the facts and in the circumstances of the case, the disallowance u/s. 14A be cancelled. 3.2 The learned CIT (A) erred in making enhancement on the ground not mentioned in the assessment order and consequently the addition of Rs. 43,72,666 could not be sustained. 3.3 The learned CIT (A) ought to have appreciated that deduction in respect of interest paid is claimed only to the extent of interest received, which is offered to tax and ignoring the claim for excess payment. 3.4 The learned CIT (A) erred in ignoring the fact that the investment in shares of the company (dividend from which being exempt) was made long ago and that too out of owned/non interest bearing funds. 3.5 The learned CIT (....
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....n Fixed Deposits with Banks/Companies and shares of a Cooperative Bank. As against interest payment of Rs. 70,32,427/- the assessee has earned interest income of Rs. 53,99,347/-. Since the interest paid was higher than the corresponding interest income the assessee restricted such deduction to Rs. 53,99,347/- only ignoring the excess of Rs. 16,33,080/-. He accordingly submitted that the disallowance u/s.14A r.w. Rule 8D should be restricted to the difference between the interest of Rs. 36,23,471/- calculated at para 48 and the interest foregone to the extent of Rs. 16,33,080/-. 53. The Ld. Departmental Representative on the other hand supported the order of the CIT(A). 54. After hearing both the sides, we find the above ground is identical to ground of appeal No.2 in the case of Shri Atul Bhavarlal Jain vide ITA No.736/PN/2013 wherein we have partly accepted such plea of the assessee and restored the issue to the file of the AO for recomputing the disallowance u/s.14A r.w. Rule 8D. Following the same ratio, we restore the issue to the file of the AO for recomputing the disallowance in the light of our direction therein. This ground by the assessee is accordingly allowed for s....